I've written about Brazil pre-Lula and post-Lula and spent the last five years covering all aspects of the country for Dow Jones, Wall Street Journal and Barron's. Meanwhile, for an undetermined amount of time, and with a little help from my friends, I will be parachuting primarily into Brazil, Russia, India and China. But will also be on the look out for interesting business stories and investing ideas throughout the emerging markets.

Barclays Calls China's Recent Data Dump 'Unexciting'

Last Friday China began a series of economic data releases for the market. The numbers came in as expected. There were no upside surprises, nor downside ones. In fact, says Barclays, most of the data was unexciting.

Real GDP growth in China came was reported at 7.9 percent year over year in the fourth quarter, roughly in line with Barclays and consensus forecasts of 7.8 percent. Full-year growth was 7.8 percent, with Barclays forecasting 7.7 percent. China GDP was 9.3 percent in 2011.

Overall, the December data was broadly in line with consensus forecasts, except for trade. The data did show a return to personal consumption in China and a softening of fixed asset investment at least in the near term across the manufacturing, infrastructure and property sectors.

While a handful of pundits and investment managers tend to doubt any economic figures out of Beijing, the Ministry of Commerce tried to respond to those concerns Friday during its regular press briefing. Ministry officials emphasized that monthly volatility in the data was common, as was frequently the case in 2012 when strong months would be followed by weak, and vice versa. They also cited both external demand and domestic factors, such as exporters’ behavior, as well as seasonal patterns as reasons for the volatility. In particular, strength in December exports can be partly explained by exporters rushing orders to avoid higher custom fees effective from January 2013.

Probably the more interesting to note from the National Bureau of Statistics’ press briefing on the same day was regarding the much reported change in China’s working age population (aged between 15-59) falling by 3.4 million to 937 million total in 2012. Its share of the total population accounted for around 70 percent of China. Also of note was the fact that consumption now accounted for 51.8 percent of Chinese GDP growth (it’s around 40 percent of the total economy) up from 50.4 percent a year ago, Barclays pointed out.

Barclays analysts led by Jian Chang wrote in a report dated Jan. 18 that, “We view demographic change, highlighted by a shrinking working age population, as a fundamental driver behind China’s transition from ‘miracle growth’ to normal development.”

Chang reiterated the Barclays Asian economics team’s view that consumption growth will outpace real GDP growth and continue to inch into the mid-50s. The government’s handling of the urbanization process will be important, as affordable housing, better public service provision and improving income distribution should boost consumption growth, while excessive and premature infrastructure investment growth could delay the rebalancing act now underway.

From the China Outlook report:

For 2013, we look for new investment projects, robust consumption and stabilizing exports to sustain growth at its potential level of around 8 percent. Upside risks to our view could come from another infrastructure boom (not our base case). Our baseline outlook is for a moderately expansionary fiscal policy (media reports are that the fiscal deficit target is likely to be CNY1.2trn, or 2.2 percent GDP in 2013, up from CNY800bn and 1.5 percent GDP in 2012), a neutral monetary stance (media reported 13.5 percent M2 growth target for 2013, compared with 14 percent in 2012) and gradual reforms. The government will face the challenge of controlling rising financial and fiscal risks from shadow banking activities while ensuring stable growth.”

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